The U.S. Environmental Protection Agency (EPA)’s repeal of the 2024 Mercury and Air Toxics Standards (MATS) amendments may be more than a one-off rollback. The action may instead signal a broader shift in how the EPA evaluates the benefits of environmental rules — particularly whether the agency will count or monetize “ancillary” benefits, such as reductions in pollutants other than the target pollutant.
If the MATS Repeal is a guide, the EPA appears poised to give less weight to benefits it views as outside the statutory target of the rule.1
The MATS Repeal marks only the most recent installment in the agency’s policy evolution on which costs are to be considered in rulemaking. The process began in 2015, when the Supreme Court, in Michigan v. EPA, held that the EPA erred in promulgating an earlier version of the MATS rule without considering cost in its calculation that the rule was “appropriate and necessary” under the Clean Air Act (CAA) Section 112(n)(1)(A). But the Michigan Court left open how costs and benefits should be weighed and said nothing about whether ancillary benefits must be counted.
The EPA’s Changing Views on Costs and Benefits
The current dispute traces back to Michigan v. EPA, where the Supreme Court held that the EPA could not deem MATS “appropriate and necessary” under CAA Section 112 without considering cost. The Court, however, did not prescribe how the EPA should weigh costs and benefits, or whether benefits from reductions in pollutants other than mercury and other hazardous air pollutants (HAPs) must be counted.
Since then, the EPA’s position has shifted with administrations. In 2020, the EPA concluded that regulation of hazardous air pollutant emissions from coal- and oil-fired power plants was not appropriate and necessary when costs were compared primarily to directly targeted benefits. In 2023 and 2024, the EPA reversed course, reinstating the “appropriate and necessary” finding and tightening standards while relying in part on broader health benefits from associated pollutant reductions.
The MATS Repeal swings the pendulum back. The EPA now argues that benefits from pollutants outside the rule’s statutory target should not drive the analysis. The accompanying Regulatory Impact Analysis goes further, declining to monetize health benefits at all and presenting quantified cost savings without a comparable monetized benefits estimate.
Is This Approach Lawful?
Whether the EPA may lawfully discount or omit ancillary benefits is now the central litigation issue.
The statutory hook is not straightforward. Section 112 requires the EPA to determine whether regulation is “appropriate and necessary,” and Michigan requires the EPA to consider cost. But the broader obligation to conduct a complete benefits analysis arises principally from executive-branch requirements, including OMB Circular A-4 and Executive Order 12866, and from Administrative Procedure Act principles requiring reasoned decisionmaking.
Under Motor Vehicle Manufacturers Ass'n v. State Farm, an agency acts arbitrarily and capriciously when it entirely fails to consider an important aspect of the problem. If the EPA has established tools for estimating those health benefits, a court may ask why the agency left them unquantified — particularly where the resulting analysis gives full effect to compliance-cost savings but little to no comparable weight to health benefits.
Existing Challenges to the MATS Repeal
The MATS Repeal is already in the D.C. Circuit. Two petitions for review filed in March 2026 have been consolidated.
- Air Alliance Houston v. EPA (D.C. Circuit, filed March 30, 2026) — environmental and public health organizations challenge the repeal as arbitrary and capricious and inconsistent with Section 112.
- State of Illinois v. EPA (D.C. Circuit, filed March 31, 2026) — a coalition of state attorneys general raises statutory and APA challenges.
The D.C. Circuit has designated the Air Alliance Houston matter as the lead case, though as of the date of this GT Alert, no significant briefing on the merits has occurred.
Three Upcoming Rulemakings to Watch
Because the D.C. Circuit may not resolve the MATS challenges before the EPA acts on other major rules, regulated entities may face the next wave of rulemakings without clear judicial guidance on whether the EPA’s new benefits framework will hold.
Power Plant Greenhouse Gas Standards
The EPA proposed in June 2025 to repeal greenhouse gas (GHG) emission standards for fossil fuel-fired electric generating units (EGUs) under CAA Section 111. The final rule is under review by the Office of Management and Budget, with Federal Register publication expected in the coming months.
Though a prominent issue will be whether the EPA regulates power-plant greenhouse gas emissions at all, the benefits analysis remains important. Prior GHG rules have relied heavily on ancillary health benefits, and challengers may argue that the EPA cannot ignore those benefits when repealing or revising standards.
PM2.5 NAAQS Reconsideration
The Biden-era EPA tightened the primary annual PM2.5 standard to 9.0 µg/m³ in March 2024. The EPA has since asked the D.C. Circuit to vacate that standard. A revised rule was originally targeted for early 2026; that timeline has slipped and remains uncertain. Notably, PM2.5 reductions are the precise co-benefit the EPA now says will not count in HAP rulemakings.
For sources in or near nonattainment areas, the practical consequences could be significant: a less-stringent annual standard may ease permitting and planning obligations, but any reversal or remand may reopen those issues.
Steam Electric Effluent Limitations Guidelines
The EPA finalized wastewater discharge limits for power plants in May 2024, later extended certain compliance deadlines, and in May 2026 proposed revisions to unmanaged combustion residual leachate provisions — in other words, leachate that percolates from coal ash landfills and impoundments. Because the Effluent Limitations Guidelines and Standards (ELG) program often involves both water-quality benefits and broader environmental or health effects, the EPA’s treatment of ancillary benefits may become central to any reconsideration of the underlying standards.
Practical Takeaways
Regulated entities may welcome the EPA’s new approach to benefits analysis because it could reduce compliance obligations under major federal environmental programs. Rules justified primarily by large ancillary benefits are now more vulnerable to repeal or revision, and the near-term savings may be concrete: the EPA estimates annualized savings of $69–$78 million from the MATS repeal alone.
However, EPA’s approach has injected uncertainty and raises the prospect of regulation by litigation. The D.C. Circuit will scrutinize the EPA’s methodology in the pending MATS Repeal challenges and perhaps in future challenges to the GHG and ELG rulemakings. If courts reject the EPA’s framework, the result may be remands, petitions for Supreme Court review, prolonged uncertainty, and rules rewritten on judicial timelines that industry will have limited ability to shape.
While near-term regulatory relief may be real, it is not necessarily durable. Stakeholders should consider treating the EPA’s current approach as an opportunity to reassess compliance strategy, preserve flexibility, and plan for potential litigation-driven uncertainty.
1 See EPA, National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units: Final Repeal, 91 Fed. Reg. 9088 (February 24, 2026) (MATS Repeal).